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Grand Strand Real Estate News
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September 2021
Volume 2021 Issue 9
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Greetings!
Summary
If you’ve never been to the Grand Strand in the fall, give it a try. Best weather of the year.
Sales have slowed down a bit, mainly because there are so few listings. The number of active listings in oceanfront buildings is down to 234 - the lowest I’ve ever seen. However, the number of condo listings off the beach has started to increase, up to 354 from the low of 286 a couple of months ago. See updated graph below.
Prices Rising as Inventory Falls
For all of you owners of oceanfront condos in North Myrtle Beach who have been considering selling, now might be the time. Prices are back where they were at the peak of the market back in 2005. There are currently only 9 condo listings in all of the newer non-condotel oceanfront buildings (built since 2004) in all of North Myrtle Beach. The oceanfront 3BRs are in the $500s or more and most of the oceanfront 4BRs are in the $600s.
The condotel listing inventory has also been dropping and the prices have been creeping up. Price increases will come faster once the inventory approaches zero for certain types of condos. Recent improvements in financing and rental management may also result in higher prices in the near future (see below).
New Condo and Condotel Financing
After many years of only having only 2 or 3 condotel lenders from which to choose and only adjustable rate mortgages (ARMs) and 15 year mortgages, we currently have at least 6 lenders financing condotels locally with lots of new programs - 30 year fixed rate financing, 15 year fixed rate financing under 4%, a source for loans in which the borrower is an LLC, and stated income loans for borrowers with lots of assets but low documentable income. For our newly updated list of lenders and contacts, order our lender list (link below) and of course, please contact us if we can be of assistance in any way.
Higher Incomes and New Rental Management Choices
Incomes for 2021 appear to be on track to reach the highest numbers we have ever seen by the end of the year. Several of my clients have reported year-to-date incomes through August that match or exceed the incomes for the entire year in 2019 (or incomes for any previous years for that matter).
There are now more viable options for rental management than I have ever seen. This year, for the first time, I am starting to see some offsite rental company’s rental incomes approach or even exceed the strong onsite company’s numbers. Many of these are virtual companies with no physical presence in our area. All book reservations but other services covered vary greatly - departure cleaning, linens, maintenance, check-ins, etc. Finding a combination of property and management which matches your desired level of personal rental management participation is important (and we can help you with that!)
Are these options better than the onsite condotel-type management companies or the established “brick and mortar” rental management companies in our area? Maybe/maybe not - depends on the owner’s needs and the particular property. A lower management fee does not necessarily lead to more income in an owner’s pocket if the gross income is far less and/or there are additional expenses that the owner has to assume. It also may mean more headaches for an owner than letting the onsite company handle every detail. In other words, don’t make a choice strictly based on the management fee.
In some resorts, some of the amenities and commercial facilities (food and beverage, laundry, fitness room, water parks, etc.) are not available to owners and guests not participating in the onsite rental program, making it questionable as to whether outside rental management is a good choice. These restrictions vary from building to building. We can help you decipher this puzzle too. For a detailed report on this situation and how it came to be, here’s a link to our July newsletter which describes this in great detail.
The important thing is that there are now real options, real competition, and I think that’s a good thing. Some companies will emerge as being the best choices for particular buyers and particular buildings and we will be your experts. Please contact us for info on these new options. Teressa, especially, has been digging into this and she knows as much about it as anyone.
Check out all our usual Grand Strand Market Reports, Sales and Listing Updates, my Best Buys, and new Beach Pro Team reviews.
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Greetings from the Grand Strand,
If you’ve never been to the Grand Strand in the fall, you should really give it a try. Best weather of the year. Clear skies with highs in the 70s and 80s with low humidity. Festivals every weekend. It’s tough to stay in the office. Oh well, got to get back to work...
Sales have slowed down a bit, mainly because there are so few listings. The number of active listings in oceanfront buildings - on the entire Grand Strand - any size or number of bedrooms- is down to 234 - the lowest I’ve ever seen. Remember that there were 1000 last October and never less than 975 in any month in the past 12 years I’ve been checking. However, the number of condo listings off the beach has started to increase, up to 354 from the low of 286 a couple of months ago. Here’s the updated chart I’ve been including each month.
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Prices Rising as Inventory Falls
For all of you owners of oceanfront condos in North Myrtle Beach who have been considering selling, now might be the time. The number of listings in the newer non-condotel buildings in North Myrtle Beach is incredibly low and the prices are back where they were at the peak of the market back in 2005. There are currently only 9 condo listings in all of the newer oceanfront buildings (built since 2004) in all of North Myrtle Beach. The oceanfront 3BRs are in the $500s or more and most of the oceanfront 4BRs are in the $600s. I excluded North Beach Towers listings since they are really in a different category but there are currently only 8 listings in this 320-unit building - far fewer than usual. By the way, the older condos in North Myrtle Beach (built in the 70s, 80s and early 90s) are selling at prices we haven’t seen in a long time too.
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The condotel listing inventory has also been dropping and the prices have been creeping up, although not at the same pace as the non-condotel condos on the ocean. I suspect the price increases will come faster once the inventory approaches zero for certain types of condos. There is also good news on the financing and rental management for these (see below) which could result in higher selling prices in the near future.
New Condo and Condotel Financing
After many years of only having only 2 or 3 condotel lenders to choose from and only adjustable rate mortgages (ARMs) and 15 year mortgages, we now have more choices. There are currently at least 6 lenders financing condotels locally. We also now have 30 year fixed rate financing for the first time. The interest rate is close to 5%, significantly higher than conventional rates, but at least it’s available and somewhat reasonable. And we have 15 year fixed rate financing under 4% - first time I’ve seen that too. Please note that these rates vary with credit score and other factors.
We’ve also got another source for loans in which the borrower is an LLC and we have stated income loans for borrowers with lots of assets but low documentable income. For our newly updated list of lenders and contacts, order our lender list (link below) and of course, please contact us if we can be of assistance in any way.
There’s good news for conventional condo loans as well. In June, Freddie Mac and Fannie Mae imposed restrictions on the numbers of second home and investment property loans they would accept. These limitations caused lenders to “ration” their second home loans. The end result of this was higher interest rates and tighter allowable loan parameters for second home loans in recent months (compared to loans for purchasing primary residences). On September 14, the US Dept. of Treasury suspended the caps for second homes (for at least 6 months). Several lenders have already issued better rates and terms and more are likely to follow.
Higher Incomes and New Rental Management Choices
I also have a couple of pieces of good news for those owners who generate rental income from their condos (or plan to when they purchase).
First, incomes for 2021 appear to be on track to reach the highest numbers we have ever seen by the end of the year. I’m still compiling data but it appears that, through August, almost all condos and rental homes are at least matching the incomes from 2019, the most recent “normal” year. Most condotels are reporting significant increases. Several of my clients have reported year-to-date incomes through August that match or exceed the incomes for the entire year in 2019 (or incomes for any previous years for that matter).
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Second, there are now more viable options for rental management than I have ever seen. I will cover this in more detail in a future newsletter. The short explanation is that technology and the ubiquitous use of the internet by everyone to purchase almost anything has drastically reduced the entrance barriers for getting into the vacation rental management business. I owned and operated a vacation rental management company years ago. The start-up expense was huge and it was virtually impossible to compete with the onsite rental management companies because of their economies of scale. That’s all changed. I mentioned this in our July newsletter in my article about how the onsite rental management companies were fighting back.
This year, for the first time, I am starting to see some offsite rental company’s rental incomes approach or even exceed the strong onsite company’s numbers. Many of these are virtual companies with no physical presence in our area. All typically charge less than the 35% to 45% fees the onsite companies charge but the levels of services offered vary a great deal as do the management fees and the gross incomes, so you have to be sure you are comparing apples to apples. Most are basically using the same tools and marketing that owners renting through VRBO and airbnb have been using for years but some also cover departure cleaning, linens, maintenance, check-ins, etc. Others just book reservations and leave these other services up to the individual owners. Finding a combination of property and management which matches your desired level of personal rental management participation is important (and we can help you with that!)
Are these options better than the onsite condotel-type management companies or the established “brick and mortar” rental management companies in our area? Maybe/maybe not - depends on the owner’s needs and the particular property. First and most importantly, please be aware that a lower management fee does not necessarily lead to more income in an owner’s pocket if the gross income is far less and/or there are additional expenses that the owner has to assume. It also may mean more headaches for an owner than letting the onsite company handle every detail. Also, some onsite rental managements do such a great job and generate such high incomes that the best choice may be to stick with them regardless of the relatively high fees. In other words, don’t make a choice strictly based on the management fee.
Another factor which must be taken into consideration is that in certain resorts, some of the amenities and commercial facilities (food and beverage, laundry, fitness room, water parks for example) are not available to owners and guests not participating in the onsite rental program, making it questionable as to whether outside rental management is a good choice. These restrictions vary from building to building. Some are still workable with offsite management but a few have restrictions so impactful that it’s almost impossible to use any other management than the onsite. We can help you decipher this puzzle too. For a detailed report on this situation and how it came to be, here’s a link to our July newsletter which describes this in great detail.
The important thing is that, for most resorts, there are now real options, real competition, and I think that’s a good thing. I’m sure that, over time, some companies will emerge as being the best options for particular buyers and particular buildings. Please contact us for info on these new options. We will be your experts. Teressa, especially, has been digging into this and she knows as much about it as anyone.
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That’s all for now. Check out all our usual Grand Strand Market Reports, Sales and Listing Updates, my Best Buys, and new Beach Pro Team reviews.
See you at the beach!
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Here are some new reviews published in Zillow.
- Listed a Myrtle Beach Condo with Gene Carter. He obtained an offer in about a week. He was very professional but also easy to communicate with and was very helpful in walking us through all the paperwork and legal transactions. We would not hesitate to engage his services as real estate agent if we have a need in the future. We felt that he was very trustworthy and would not give us wrong advice. Jean. Sea Watch. Myrtle Beach.
- Inquired about an oceanfront condo that another buyer had a hold on pending a personal visit and inspection. 5 minutes later he received a phone call that the other party decided not to visit. Gene called me back and sold the condo to me. Professional and very helpful when financing was delayed. Seller very accommodating. Great experience! Roy. Crescent Shores. North Myrtle Beach.
We have chosen to utilize Zillow's review platform. This is not an endorsement of Zillow (Please ignore the ridiculous "Zestimates") but we think an online third-party review service provides more credibility than simply printing reviews ourselves. At this time, we have over 100 reviews with more coming in each month. To see all of the reviews at any time, you can visit Zillow Beach Pro Team reviews.
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Grand Strand Market Report
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Below is a link to a detailed report on the current state of our local real estate market complete with statistics for just about anything imaginable. Please keep in mind that these statistics cover a broad range of properties and that particular areas or developments may behave quite differently.
As always please contact me if I can be of service in any way.
See link below to interpret terms used in this report.
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The following current listings are exceptionally well-priced and represent great values. The spreadsheets are sorted by price. These are live links to listing details and they will change according to changes in the MLS (Pending, Sold, etc.). The listing details are in the same order as the spreadsheets. Please call me directly if you find something of interest to you.
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If you are considering buying or listing any property on the Grand Strand, or if I can be of assistance in any other way, please contact me. Also, please feel free to forward this newsletter to friends or acquaintances and of course I will be happy to add them to my email list.
Finally, please let me know if you are going to be in the area and would like to get together.
See you at the beach!
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Gene Carter
Beach Pro Team
Cell Phone: 843-455-4785
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The material provided is for informational and educational purposes only and sometimes contains current or forward-looking statements on real estate market conditions, and should not be construed as legal, investment and/or real estate advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is without errors, and is not necessarily the opinion of RE/MAX Southern Shores or its agents.
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